Author: Surfer Chick

If you’re not familiar with forex trading, you’re probably wondering how it’s different from stock trading. But if you really want to know, both forex trading and stock trading are both risky investments that is NOT for everyone. Also, both types of investments do NOT involve any real loss unless if you convert your investment into cash. However, this is where the similarity ends.

In this article, we will list the major differences between the two. Read below to know.

1. Currencies vs company ownership

With forex trading, you’re basically buying and selling currencies in different currency pairs, for example, buying and selling dollars through your own currency. Stock trading, on the other hand, involves buying and selling company stocks.

With forex trading, your gain and loss really depends upon the strength of the currency you’re buying. On the other hand, profits and loss in the stock market depends upon the strength of a company stock, that is, you profit when you buy when stock price is low and sell it when the price is up. With stock trading, you own part of the company while forex trading does not involve ownership of any kind.

2. Trading hours

With forex trading, it is possible to trade currencies at any time of the day wherever you are in the world. With stock trading, you depend on the business hours of the stock exchange where the stock is listed on. If you want to invest in Microsoft blue chip stocks, for example, you will need to trade on Nasdaq.

3. Leverage investing

With forex investing, it is possible to trade $10,000 worth of currencies with only $50 capital. You can’t do this with stocks. Stock are sold at how many dollars per share and you can only buy as much as your investment money will let you.

4. Recovery of loss

The good and bad thing about forex trading is that currencies vary in strength on a day-to-day basis, and thus it is possible to recover your loss in the next day’s trading. Also, since currency strength largely depends on the economy of a country, the risk of total loss is rather minimal.

With stock trading, your profit and loss depends entirely on the profitability of a company. When a company goes bankrupt, there’s almost zero percent chance you will be able to recover your investment.

5. Risk

Risk in stock trading really depends from stock-to-stock. Blue chip stocks are premium investments where you are always guaranteed profits in trading and sometimes, dividends. Companies that are facing insolvency are riskier to invest in.

Risk on forex trading is entirely dependent on the strength of the economy that the currency is associated with.

And that’s it for the major differences between forex tading and stock trading. If you want to invest in forex trading, there are many trading websites out there to get you started. If you ask us, however, you shouldn’t trade with real money right away because, as we said earlier, forex trading is risky business. Take advantage of forex demo accounts.

The different types of stock are what confuse most first time investors. That confusion causes people to turn away from the stock market altogether, or to make unwise investments. If you are going to play the stock market, you must know what types of stock are available and what it all means!

Common Stock is a term that you will hear quite often. Anyone can purchase common stock, regardless of age, income, age, or financial standing. Common stock is essentially part ownership in the business you are investing in. As the company grows and earns money, the value of your stock rises. On the other hand, if the company does poorly or goes bankrupt, the value of your stock falls. Common stock holders do not participate in the day to day operations of a business, but they do have the power to elect the board of directors.

Along with common stock, there are also different classes of stock. The different classes of stock in one company are often called Class A and Class B. The first class, class A, essentially gives the stock owner more votes per share of stock than the owners of class B stock. The ability to create different classes of stock in a corporation has existed since 1987. Many investors avoid stock that has more than one class, and stocks that have more than one class are not called common stock.

The most upscale type of stock is of course Preferred Stock. Preferred stock isn’t exactly a stock. It is a mix of a stock and a bond. The owner’s of preferred stock can lay claim to the assets of the company in the case of bankruptcy, and preferred stock holders get the proceeds of the profits from a company before the common stock owners. If you think that you may prefer this preferred stock, be aware that the company typically has the right to buy the stock back from the stock owner and stop paying dividends.

While quite a bit of time and research goes into selecting stocks, it is often hard to know when to pull out – especially for first time investors. The good news is that if you have chosen your stocks carefully, you won’t need to pull out for a very long time, such as when you are ready to retire. But there are specific instances when you will need to sell your stocks before you have reached your financial goals.

You may think that the time to sell is when the stock value is about to drop – and you may even be advised by your broker to do this. But this isn’t necessarily the right course of action.

Stocks go up and down all the time, depending on the economy…and of course the economy depends on the stock market as well. This is why it is so hard to determine whether you should sell your stock or not. Stocks go down, but they also tend to go back up.

You have to do more research, and you have to keep up with the stability of the companies that you invest in. Changes in corporations have a profound impact on the value of the stock. For instance, a new CEO can affect the value of stock. A plummet in the industry can affect a stock. Many things – all combined – affect the value of stock. But there are really only three good reasons to sell a stock.

The first reason is having reached your financial goals. Once you’ve reached retirement, you may wish to sell your stocks and put your money in safer financial vehicles, such as a savings account.

This is a common practice for those who have invested for the purpose of financing their retirement. The second reason to sell a stock is if there are major changes in the business you are investing in that cause, or will cause, the value of the stock to drop, with little or no possibility of the value rising again. Ideally, you would sell your stock in this situation before the value starts to drop.

If the value of the stock spikes, this is the third reason you may want to sell. If your stock is valued at $100 per share today, but drastically rises to $200 per share next week, it is a great time to sell – especially if the outlook is that the value will drop back down to $100 per share soon. You would sell when the stock was worth $200 per share.

As a beginner, you definitely want to consult with a broker or a financial advisor before buying or selling stocks. They will work with you to help you make the right decisions to reach your financial goals.

The foreign exchange market is also known as the FX market, and the forex market. Trading that takes place between two counties with different currencies is the basis for the fx market and the background of the trading in this market. The forex market is over thirty years old, established in the early 1970’s. The forex market is one that is not based on any one business or investing in any one business, but the trading and selling of currencies.

The difference between the stock market and the forex market is the vast trading that occurs on the forex market. There is millions and millions that are traded daily on the forex market, almost two trillion dollars is traded daily. The amount is much higher than the money traded on the daily stock market of any country. The forex market is one that involves governments, banks, financial institutions and those similar types of institutions from other countries. The

What is traded, bought and sold on the forex market is something that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is actually going to be cash. From one currency to another, the availability of cash in the forex market is something that can happen fast for any investor from any country.

The difference between the stock market and the forex market is that the forex market is global, worldwide. The stock market is something that takes place only within a country. The stock market is based on businesses and products that are within a country, and the forex market takes that a step further to include any country.

The stock market has set business hours. Generally, this is going to follow the business day, and will be closed on banking holidays and weekends. The forex market is one that is open generally twenty four hours a day because the vast number of countries that are involved in forex trading, buying and selling are located in so many different times zones. As one market is opening, another countries market is closing. This is the continual method of how the forex market trading occurs.

The stock market in any country is going to be based on only that countries currency, say for example the Japanese yen, and the Japanese stock market, or the United States stock market and the dollar. However, in the forex market, you are involved with many types of countries, and many currencies. You will find references to a variety of currencies, and this is a big difference between the stock market and the forex market.